Post-term US shares gain twice as much as a typical year according to historical data analyzed by Craigs Investment Partners, defying pre-poll flatlines and setting up distinct market dynamics for the remainder of 2026.
- Post-midterm US equities historically deliver an average gain of 13.6% over the subsequent 12 months, outperforming the typical 6.8% return seen in normal periods.
- Markets approach the post-election cycle with reduced policy uncertainty, though modern concentration in mega-cap tech stocks introduces new structural risks.
- Key macroeconomic headwinds, including Middle East instability, oil price fluctuations, and Federal Reserve rate decisions, remain critical variables for the streak to continue.
Uncertainty surrounding midterm elections often prompts investors to respond positively once outcomes materialize, simply because direction becomes clear. While the S&P 500 rose 10.5% in 2026 just before polling day, the market remained flat in the three preceding months despite a strong earnings backdrop, pointing to lingering investor nervousness.
Looking back at midterm elections over the past 100 years, the market gained in the following 12 months 23 out of 25 times. That represents a 92% hit rate, with an average return of 13.6% and a median gain of 14.5%.
By comparison, a typical 12-month period since the late 1920s delivers a positive return 69% of the time for an average gain of 6.8%, excluding dividends. The last time the market declined in a post-midterms period was in 1938, preceded only by the 1930 midterms during the Great Depression era of banking failures, deflation, and the Smoot-Hawley tariffs.
| Period Type | Positive Return Probability | Average 12-Month Return | Median Gain |
|---|---|---|---|
| Post-Midterm Years (100-Year History) | 92% (23 of 25 times) | 13.6% | 14.5% |
| Typical 12-Month Period (Since Late 1920s) | 69% | 6.8% | 13.6% |
It is common for a president’s party to lose support in midterm elections, typically resulting in a divided government. Markets often welcome gridlock because it reduces the likelihood of sudden, major policy changes.
This cycle diverged from the traditional pattern, leaving Democrats in control of both the House of Representatives and the Senate. President Donald Trump faces major obstacles in executing his domestic agenda as his term progresses toward the 2028 presidential election.
“With the Democrats in control of the House of Representatives and the Senate, President Donald Trump will struggle to execute his domestic agenda,” Mark Lister, Investment Director at Craigs Investment Partners, told the NZ Herald, noting that wounded Republican colleagues will look to him to stabilize the party.
Despite strong historical odds, modern market structure presents unique vulnerabilities. The US market is significantly more concentrated today than in any historical post-midterm period, meaning the continuation of the winning run depends heavily on how a small group of mega-cap technology stocks perform.
Geopolitical tensions in the Middle East continue to drive oil prices, inflation, and cost-of-living pressures—factors that heavily influenced voter sentiment against incumbent Republicans. These energy dynamics directly inform the Federal Reserve’s path on further rate hikes and influence longer-term US bond yields.
Artificial intelligence has fueled economic growth and equity gains in recent years, though regulators or a Democratic Congress may scrutinize data center expansion.
Disclaimer: The information provided in this article is for information only, is intended to be general in nature, and does not take into account your financial situation, objectives, goals, or risk tolerance. Before making any investment decision Craigs Investment Partners recommends you contact an investment adviser.
